14 November 2014

Building on connectivity

THERE is a growing interest for transit-oriented developments (TOD) in Malaysia.

TOD is a mixed-use residential and commercial project designed to maximise access to public transport. Under the TOD model, feeder services are provided between the railway stations. Public transport interchanges are constructed next to the stations for easy access to the feeder services.

Hong Kong plays a leading role in implementing TOD and enhancing rail and development integration with good station accessibility and connectivity.

For instance, new towns have been developed successfully around stations along the Tseung Kwan O Line. These new towns are centred around a rail station which is connected seamlessly to malls and housing estates.

Interchange facilities are also provided near the stations for transfers to other public transport.

In Kuala Lumpur, the KL Sentral development in Brickfields by Malaysian Resources Corp Bhd was the first project to be developed using the TOD model.

Being part of an exclusive urban centre built around the country’s largest transit hub, KL Sentral offers global connectivity, excellent investment opportunities and an international lifestyle.

Stesen Sentral is where six rail networks converge, including the LRT, ERL, KTM and also the monorail, which it connects to via a pedestrian walkway.

Residences at KL Sentral have seen great capital appreciation and rental demand.

Prasarana, the owner and operator of several public transport providers, namely the Ampang and Kelana Jaya LRT lines; KL Monorail system; bus operations in the Klang Valley and Penang; and cable car services in Langkawi, has several parcels of land for development.

The assets that Prasarana owns, which are in the form of LRT stations, depots and Park-n-Ride facilities, hold vast potential to generate long-term income for the company.

Through its unit, Prasarana Integrated Development Sdn Bhd (Pride), it will tap and maximise on the economic potential of land banks and real estates along the Ampang and Kelana Jaya LRT lines.

Pride will allow Prasarana to be a key player in the country’s expanding property sector.

Prasarana had identified more than 13 parcels of land for development along its future and existing LRT stations. Agreements have been inked with six developers for joint mixed-property developments along its LRT extension lines in Dang Wangi, Brickfields, Kelana Jaya, Awan Besar, Ara Damansara and Taman Tun Dr Ismail.

For the Kelana Jaya LRT, Crest Builder Holdings Bhd will undertake a mixed use development which will be integrated with the station.

Crest Builder inked the joint-venture agreement with Prasarana last year for the RM1 billion project, beating out firms such as Ahmad Zaki Resources Bhd, the MCT group and TH Properties Sdn Bhd.

Under the joint-venture agreement, the construction firm’s wholly-owned unit Crest Builder International Sdn Bhd will develop the 2ha land into serviced residences and offices.

As the landowner, Prasarana is entitled to 24.8 per cent of the gross development value, or RM248 million, from the joint-venture deal.

This is Crest Builder’s second joint venture with Prasarana to monetise its land bank along rail lines.

Two years ago, Crest Builder bagged the development of a RM1.04 billion project, comprising a 40-storey tower atop the Dang Wangi LRT station along Jalan Ampang in Kuala Lumpur. It was this project that marked Prasarana’s foray into property development.

In early 2013, Prasarana announced an RM687.5 million commercial-residential project in Ara Damansara with TRC Synergy and an RM153 million 26-storey condominium tower in Taman Tun Dr Ismail with Naza TTDI.

For the land in Brickfields, Prasarana inked a joint-venture agreement with Bina Puri Holdings Bhd, which will undertake a RM1.3 billion mixed development and link it to the Tun Sambanthan monorail.

Bina Puri will build 1,660 units of small office-versatile office compressed in three towers, a 22-floor serviced suite, a commercial podium, a sky bridge and car park on a 1.9ha site.

IOI Properties Bhd and SM Land Sdn Bhd will each develop a 2.83ha site in Puchong and 2.02ha in Awan Besar, which will have a gross development value (GDV) of RM500 million and RM600 million, respectively.

Prasarana would get about 16 per cent out of the GDV from the property sales. In addition to that, Prasarana will have a joint-venture company manage the commercial space leased, providing it with additional income.

Prasarana’s non-fare businesses currently make up 10 per cent of its revenue while it gets the rest of its income from fare-based operations, including rail and bus.

Prasarana Negara Bhd group managing director Datuk Seri Shahril Mokhtar expects the company’s non-fare revenue to contribute 30 per cent to its revenue by 2018, and to maintain that at 40 per cent in the following years.

“With all these property developments taking place within the LRT station area, we can expect an increase in property value and ridership. Over the next five years, we can expect ridership to surpass one million a day, from 530,000 currently, on the Ampang and Kelana Jaya LRT lines and the monorail,” Shahril told Property Times.

Prasarana has identified several more areas for development along the Ampang and Kelana Jaya LRT lines.

Shahril said some of the projects will be offered to developers via a direct negotiation basis as they currently own the land.

“For land that we own, we will call for an open tender. Most of the projects will be implemented using the TOD model. That is the trend now as house owners look for integrated developments with good public transport and connectivity. KL Sentral started this trend with its transit hub. From that idea, we started to build based on TOD,” Shahril said.

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